Depending on the location of the property you wish to buy, as a First-Time Caymanian Buyer, you may be eligible for a reduced rate of stamp duty, or even better, a total stamp duty exemption!
With pending updates coming soon to the Stamp Duty Law, we can expect an increase in the First-Time Caymanian Buyer threshold to occur in January of 2019.
Yusssss we hear you shout! Well, there is a little more to it and we’d certainly recommend you seek legal advice once ready to begin. To get you started, we’ve put together a quick summary on Stamp Duty 101.
STAMP DUTY RULES
Normally, on every property purchase, a stamp duty is paid to the Cayman Islands Government at a rate of 7.5% of the value of the property or land. E.g. if the property is CI$200,000, then CI$15,000 extra will be owed on closing (on top of your purchase price and mortgage down payment). It’s important to be aware that the banks who lend you the money to buy your home will not allow you to add this fee to your mortgage.
First things first, you’ve got to be Caymanian (and we know that this in itself can be complicated!). It is advisable to make an application to the Minister of Finance’s office at the Government Administration Building prior to your property purchase to ensure your eligibility. (See link below)
You will need to prove that you are Caymanian and if you are applying with your spouse then you will need to provide a certified copy of the marriage certificate. A sworn affidavit signed by a Notary Public or Justice of the Peace is required together with a copy of the land register of the property you want to purchase and recent private sector valuation report (within last six months from an approved valuation survey) proving the value of the land.
There are also some exceptions that a first-time Caymanian buyer needs to be aware of when selecting potential properties to buy. Certain land or property located in the Seven Mile Beach corridor and in George Town will not qualify for the stamp duty waiver and the full 7.5% stamp duty will be due.
Also, be aware that stamp duty exemptions do not apply to overseas first time buyers and interests in property held in the name of a company do not qualify for reduced rates of stamp duty, regardless of the ownership of the company.
THE RATES AND REQUIREMENTS
Caymanian buyers may qualify for a reduced rate of stamp duty but only when the land or property is for your first owner-occupied dwelling and providing that the market value is below certain CI$ thresholds.
Simply put, to be eligible for the stamp duty exemption:
To be eligible for full exemption:
Land – current market value of land cannot exceed CI$150,000
Property – current market value of building and land cannot exceed CI$400,000
To be eligible for 2% exemption:
Land – current market value of land must be over CI$150,000 but not exceed CI$200,000
Property – current market value of building and land must be over CI$400,000 but not exceed CI$500,000
The specific rates of duty applicable together with application requirements can be found here: CNS Library
Caymanian spouses: If a husband and wife who are both Caymanian first-time homeowner have been approved for stamp duty waiver and are taking title in both of their names, then they will effectively ‘use up’ both of their waivers on the purchase. If either spouse takes title in their name solely, then their spouse’s waiver may be used for another property purchase.
Caymanian and non-Caymanian spouse: If a husband and wife intend to take title in both of their names and only one spouse is Caymanian, then the stamp duty waiver will only be eligible on 50% of the current market value of the property. The non-Caymanian spouse will be required to pay the standard 7.5% stamp duty fees on 50% of the purchase price.
Stamp duty waivers also cannot be used partially or split between property purchases.
Once title has been taken, there is a restriction placed on the land register preventing the owner(s) from transferring title to the property for a five-year period. That means you won’t want to sell your home for five years after purchase or you’ll risk having to pay the full stamp duty owed. Any transfer of title which holds the restriction requires the consent from the Financial Secretary to remove or lift the restriction.
Don’t forget, team Property Cayman is able to advise you ANY property on island (Cireba, Ecay or private sale). We can help guide you through the process as our team of agents (Mike Joseph, Stefan Prior, Jen Powell, Jude Holland and Teresa Foster) have over 20 years’ experience in Cayman Islands real estate and even more importantly, we care about connecting good people with great places!
All you have to do is get in touch. Don’t worry, it’s free of charge and all we ask is that you trust us to do our job – to help you find your perfect home!
We look forward to helping you on your property journey!